Laos

Laos is one of the smaller countries in Southeast Asia, but it is rich in natural resources and extremely biodiverse. The landlocked country is under increasing pressure, however. The rapid exploitation of its natural resources and growing external debt are hindering development. The longstanding cooperation between Laos and Germany is therefore all the more important. This cooperation focuses on sustainable growth,
poverty reduction and environmental protection.

Despite ongoing economic growth, Laos remains one of the poorer countries in Southeast Asia. It is facing considerable challenges when it comes to poverty reduction, especially in rural areas. A lack of food security, inadequate education and insufficient infrastructure led the Human Development Index (HDI) to class Laos as a country with a medium level of human development in 2025, ranking it 147th out of 193 countries.

A significant proportion of government revenue in Laos is based on natural resource extraction, in particular logging and the mining of gold, copper and other minerals. While this creates revenues in the short term, it is destroying the environment and also exacerbating social inequalities. Additionally, Laos has a huge amount of public debt, mostly in the form of loans from neighbouring China. China has established itself as Laos’ most significant political and economic partner, and is continually expanding its presence in the country through infrastructure projects and investment.

German development cooperation with Laos

Germany and Laos have maintained diplomatic relations for over 60 years. There had originally been plans to phase out bilateral cooperation between the two countries by the end of 2024. However, in view of the current crises, which are making it more difficult for the country to graduate from the group of least developed countries (LDCs), in 2022 Laos was re-included in the BMZ’s list of partner countries.

Germany is one of Laos’ biggest bilateral donors within the OECD, and is particularly active in the areas of forest conservation and biodiversity. Germany provides ongoing support for the goal of achieving net zero emissions – an equal balance between the emission and capture of greenhouse gases – by 2025. This support takes the form of both Technical and Financial Cooperation. At the government negotiations in September 2024, the Federal Ministry for Economic Cooperation and Development (BMZ) committed a total of 41 million euros in funding for Laos. Germany is also Laos’ biggest bilateral partner in the context of Team Europe, and contributed around 162.4 million euros in the period up to 2025.

Germany’s cooperation with Laos focuses on the following core areas:

Conserving nature and natural resources, protecting life on Earth
Areas of intervention: biodiversity, forests
Sustainable economic development, training and employment
Area of intervention: technical and vocational education and training, private sector and
financial sector development
Transformation of agricultural and food systems
Areas of intervention: rural development, food security
Peaceful and inclusive societies
Area of intervention: good governance

The rich ecosystems in Laos are a source of livelihood for millions of people and home to exceptional biodiversity. Logging, poaching, climate change and weak administrative structures are putting pressure on these valuable resources, however. To protect the natural environment and livelihoods in Laos, Germany is supporting the government, the private sector and local partner organisations in conserving ecosystems and using them sustainably.

The consequences of the pandemic and shrinking government budgets have set the education system in Laos back by about a decade. Pupils in rural areas in particular often drop out of school early. In addition, the lack of training opportunities and poor job prospects are causing many young people to migrate abroad. Germany has been working with Laos in the area of vocational training since the 1960s. The current project aims to modernise vocational training and make it more inclusive, improve opportunities for disadvantaged groups, and thereby reduce migration.

In rural Laos, cultivating farmland and forests is a source of livelihood for much of the population, particularly ethnic minorities. There is often a lack of legal security around land use, however, which jeopardises agricultural production and thus threatens food security. In addition, many mountain villages in Laos are remote and difficult to reach, which makes supplying their needs challenging. Germany is supporting Laos in its efforts to strengthen land rights and improve infrastructure.

While Laos is gaining in economic importance, political participation by the general population remains extremely limited. Structures that enable equal access to government services and legal support are lacking, for example. Against this backdrop, Germany is supporting a project aimed at fostering interaction between the government and the people of Laos and advancing inclusive development long-term.